After years of anticipation for Tesla's entry into the Indian EV market, the reality of its plans in India seems limited, for now. Kumaraswamy also confirmed what was speculated, that Tesla has no plans to manufacture vehicles in India and plans to open showrooms to sell imported Teslas.
"Only, Tesla wants to open showrooms and sell imported cars," Kumaraswamy told reporters, putting speculation of Tesla developing a local plant under India's revamped electric vehicle (EV) manufacturing policy to rest.
Recently, India’s government announced a new pro-EV manufacturing plan — the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) — which makes some very large cuts to import duties for foreign automakers who invest at least $486 million in local manufacturing.
This policy offers companies the chance to set up limited operations and reduce the import duties from 70% to a mere 15% on a limited number of electric cars, in exchange for committing to some production within India.
Other Automakers Step Up
While Tesla has hesitated, some of the major global players are taking an interest in the Indian marketplace.
According to Kumaraswamy, Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia are all looking to proceed under the new policy for EV manufacturing. The Indian government is looking to start accepting formal applications soon.
Affordability and Infrastructure Loom Large
Tesla's hesitation may go beyond the EV market and should be considered within India’s price sensitive market. The minimum priced Model 3 is $42,490 (around ₹37 lakh) on the base model before import duties increase the price into the upper luxury strata which is simply out of reach for the vast majority of the Indian car buying population.
Also, the company's direct retail and thin service network, will complicate plans for India. As noted recently, Tesla was in the news for securing showroom space and had job postings that showed some intent to enter India; however, their dependence on other countries for manufacturing will limit their influence.
Industry analysts have noted, however, that Tesla could still find success with their premium EV brand in India, in this market but they need to accept a different price tag and value locally than they would in other markets. For now, the focus is on other car manufacturers who are ready to make the leap.
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